HCL Infosystems reports consolidated revenue of Rs. 2,606 crores

Revenue from Hardware Products and Solutions business for the quarter was Rs.1,092 crores, a sequential growth of 57%

Revenue from Services business for the quarter was Rs 136 crores, a sequential growth of 7%.

Revenue from Learning business for the quarter was Rs 14 crores.

Revenue from Distribution business for the quarter was Rs 1421 crores.

Consolidated loss after tax was Rs 38 crores, mainly on account of receivables impairment, unfavorable exchange rate fluctuation while executing a large-size PC order from a State Government and interest costs on working capital in government projects.

HCL Infosystems India’s premier Services, ICT System Integration, Hardware and Distribution Company today announced its financial results for the second quarter ending December 31st 2012.

Mr. Harsh Chitale, Chief Executive Officer, HCL Infosystems Limited, commenting on the results said,“We had some positive developments this quarter with our enterprise PC business and Tablet business registering healthy growth. Our Services business including Infrastructure Management Services, Facility Management Services and Enterprise Application Services continued to witness positive traction in the market. Also I am happy to note that our UIDAI engagement as the Managed Service Provider has got off to a good start. Our Learning Business too notched up focused growth with the addition of a number of Digischool classrooms as well as with the foray into the B2C space.

On the other hand our Hardware Solutions and System Integration business has been severely impacted due to continued delays in government decision making and economic slowdown. Consequently, few of our projects witnessed cost over-runs and delayed payments. An increase in receivables impairment of Rs 18 crores and interest cost of Rs 5 crores sequentially impacted our profitability this quarter.

We have also recently announced the restructuring of the company wherein we are reorganizing our business into various subsidiaries. This company wide transformation will provide for focused management orientation to each of the businesses which are at various stages of maturity and create a leaner organization for the Hardware business. Each of the businesses will be un-constrained to chart their own respective growth paths. I am confident that the restructuring strategy will show positive results in the coming quarters and we will be able to register robust growth and profitability across our businesses”.

Key Updates and Quarter Snapshot

Our profitability in this quarter was significantly impacted due to various transient factors including receivables impairment, unfavorable exchange rate fluctuation while servicing a large-size PC order from a State Government, interest costs on working capital in government projects and increase in branding expenses. These factors together had a total impact of around Rs 40 crores on our bottomline sequentially this quarter.

One of our growth focus areas, Services business, continued to gain traction by winning seven large deals in the IMS (Infrastructure Management Services) and FMS (Facility Management Services) space in the Indian market. The Singapore business also showed good progress. The IMS practice launched value added services like ITIL & Data Center Infrastructure Management Consulting with key partners.

Our after-sales support services business, HCL Care, won new engagements such as the DELL field Services. The business also expanded its Blackberry operations from 3 stores to 50 stores in North and East India.

The cloud computing business also gained new engagements in the Mobility, Field Force Automation and Intranet space. Also new partnerships were formed with Kryptos and EMC.

Our efforts to diversify product portfolio of our Distribution business have yielded encouraging results. Our Digital Entertainment Distribution grew with signing of new partners such as De Longhi, HCL Learning and a leading tablet brand. The IT Distribution Business is poised to deliver handsome growth in the upcoming quarters with the addition of new partnerships such as Dell, Huawei and Edgecore. The business also added new products such as Battery, Powerpack and Bluetooth models to its portfolio.

Our Mobility business continued to grow strongly with the market. In addition to launch of three new tablets in India, the business expanded its retail reach in India to 4500 outlets. The Mobility business also expanded its operations in the global emerging market by launching new tablet models in Middle East as well as in Africa. Market share of ME Tablets reached 15% in UAE market strengthening the company’s foothold in the MEA region. Unmukt Chand, who gained fame as the U-19 Indian cricket team skipper and who led the team to victory in the ICC U-19 World Cup 2012 has been signed as the worldwide brand ambassador for ME Tablets. The business is well on target for achieving a fivefold growth by the end of the company’s FY 2012-13 (ending June 2013) in comparison to the last FY 2011-12.

The Learning Business also registered growth with more than 400 classrooms added by our Digischool offering in this quarter. As part of our focus to advance into the B2C space, the business tied up with Big Baazar to make available MyEduWorld products in 118 stores across the country. The business bagged an international content licensing deal in South Africa. The business also launched EasySchool – a unique integrated multimedia classroom infrastructure with HCL Learning content that is easy to use, accessible and affordable. We expect our Learning business to turn profitable soon as it reaches a credible scale in B2B and also due to our push in B2C domain.

Subdued economic growth, delayed government decision making and muted IT spends were the challenges faced by our Hardware & Solutions Business as by rest of the industry. This translated in project delays, cost-over runs and high interest costs for our Hardware & Solutions business.

Despite the challenging environment, our Enterprise PC business won major orders from State Bank of Bikaner and Jaipur, State Bank of India, Dena Bank among others. However, our profitability in this quarter suffered due to an unfavorable exchange rate while servicing a large-size PC order from a State Government this quarter.

The System Integration (SI) business of the company has a healthy order book for the next few quarters that will ensure robust growth. However, project delays have led to cost over-runs and high interest burden.

The BFSI segment in our System Integration Business recorded a robust growth over the last quarter. There were also substantial orders for the company in the Financial Inclusion space which has increased its market share. Some of the key achievements in the BFSI segment also include:-

o The company’s Jaipur Development Centre (JDC) initiated the testing of a Financial Inclusion Platform to enable Banks for Direct Cash Transfer using Aadhar (UIDAI)

o JDC also developed the Technology Platform for the Financial Inclusion Gateway which would enable various Technology Service Providers to provide Financial Inclusion services

HCL Infosystems MEA, the company’s subsidiary based out of Dubai won major orders from DEWA (Dubai Electricity & Water Authority) for a data center virtualization solution and an Enterprise network & security solution. The business also won orders from RAK Ceramics, FEWA (Federal Electricity & Water Authority) for support services for SAP back-up test environment and UASC (United Arab Shipping Company) for a storage solution.

Like the rest of the Hardware business, our Office Automation business also confronted challenging market conditions. The company’s OA Business added new customers such as Tata Global Beverages Ltd., Bridgestone, L&T Special Steel and Forgings etc and won major orders from Accenture, BHEL, Eastern Command of the Indian Army, HT Media and Director General of Signals. The business also exhibited technological expertise by implementing 3D Light Depth based Visualization Technology at IIT Hyderabad, launched Avaya Voice Portfolio and formed an exclusive partnership for Intec specialty production printers. Some of the breakthrough orders won included Bank of Indonesia & Central Excise for Multi Function Display and LIC & Dena Bank for Audio Video SI.

About HCL Infosystems

HCL Infosystems Ltd. with revenue (LTM) of US$ 2.0 billion (Rs 10,401 crores) is India’s Premier Technology Company and offers a wide spectrum of IT Services and Products ranging from Cloud to Learning Solutions. As a complete IT solutions provider the company offers comprehensive offerings in Enterprise Application Services, IT Infrastructure Managed Services, System Integration, Office Automation Products and Services, Distribution and Support Services. The company operates in both the Consumer and the Enterprise space – offering the latest mobility products and operating in verticals like BFSI, Telecom, and Healthcare respectively.

HCL Care, the support and service division of the company has one of the largest and most extensive service networks across the country and provides end to end support services for various IT, Telecom and Consumer Electronics products.HCL Infosystems has one of the largest distribution network of digital lifestyle global brands and an unparalleled robust service network in the country including Tier 2 and 3 cities. Digilife Distribution and Marketing Services (DDMS), a 100% subsidiary of HCL Infosystems focuses on multi brand distribution and offers value added distribution for its partners including strategic consulting services, last mile connect and support in marketing and promotions. HCL Learning a division of the company covers the entire spectrum of education and training requirements across schools, colleges, individuals and enterprises and offers rich learning solutions across these segments. HCL Infosystems MEA (Middle East and Africa), a fully owned subsidiary of HCL Infosystems is part of the emerging markets outreach of the company and focuses on expanding the business in the Middle East and African geographies and provides comprehensive IT solutions to customers across verticals in the region. The company also has robust operations in Singapore with its subsidiary HCL Insys Pte. Ltd. gaining traction in the region with its Enterprise solutions including a strong offering in Infrastructure Managed Services.

HCL is a $6.2 billion leading global technology and IT enterprise comprising two companies listed in India – HCL Technologies and HCL Infosystems. Founded in 1976, HCL is one of India’s original IT garage start-ups. A pioneer of modern computing, HCL is a global transformational enterprise today. Its range of offerings includes product engineering, custom & package applications, BPO, IT infrastructure services, IT hardware, systems integration, and distribution of information and communications technology (ICT) products across a wide range of focused industry verticals. The HCL team consists of over 90,000 professionals of diverse nationalities, who operate from 31 countries including over 500 points of presence in India.